Companies of All Sizes Turning To Commuter Subsidies as Employee Morale Builder Program Saves Money

Daniel Neuburger

There is a continuing quest by large and small companies for programs to enhance employee benefits and morale while reducing overall costs to the company.

As healthcare reform reduces trade-off options for a key element of employer benefits, smart executives/owners are turning to other more affordable programs to maintain and enhance the corporate experience for employees.

In this process, an emerging and uniquely urban-centered benefits approach is gaining corporate champions ---- commuter benefits programs. Commuter Benefits programs have several unique advantages for both large and small employers. They enable both the company and the employee to save on taxes, a significant benefit to both parties.

Employers save because they do not pay FICA payroll taxes on the monies set aside for these programs. In fact, in 2010, based on tax savings, employees can save up to 47%1 of their commuting costs, up to $1,3002 a year.

Equally as important, these programs are relatively easy to implement and administer. For small employers, companies such as TransitCenter, provider of the TransitChek® Commuter Benefits Program, offer an easy-to-use program tailored to the specific needs of the small business segment. TransitChek also offers a wide-range of services and technology to ease administration costs and efforts for medium to large size companies across the country.

According to Daniel Neuburger, President & CEO of TransitCenter, “as commuting costs are rising across the country, interest in these programs has skyrocketed, with large numbers of companies investigating and implementing these programs. More than 35% of companies are currently offering a commuter benefits program and that number increase to 46% in the Central Business District according the results from TransitCenter’s 2009 Commuter Impact Survey.”

A survey by this newsletter’s parent Information Strategies, Inc., earlier in 2010 found that one in four urban-centered respondents said they had implemented or are examining such programs. Another study, by a leading transportation analyst indicated that debit/credit card fare paying is expected to double in the next five years as more and more urban transportation systems move toward cashless payment schemes.

This trend will accelerate the use of corporate-issued debit cards as a means of benefiting employees while reducing FICA contributions for employers. Commuters who use transportation operators who do not currently utilize electronic payment systems can use vouchers to take advantage of the benefit.

According to Neuburger, “we are seeing a lot more interest in companies offering commuter benefit programs for their employees.” This is the one benefit that is a win-win for everyone – companies save money on FICA, employees save money on their commute and when people switch from driving to transit, we are reducing traffic congestion and helping the environment. It is also a means of building employee satisfaction.

Neuburger adds, “however, implementation needs to be guided by experienced and proven providers who can make the process easy and more rewarding.”